Treasury turns screws on ‘virtual currency mixer’ Tornado Cash

On 8 August, the US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) said it had sanctioned a ‘virtual currency mixer’ called Tornado Cash, which, it said, had been used to ‘launder more than $7 billion worth of virtual currency’, including ‘over $455 million stolen by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group that was sanctioned by the U.S. in 2019, in the largest known virtual currency heist to date.’

OFAC said that Tornado Cash had been used to launder more than $96 million of malicious cyber actors’ funds derived from the 24 June2022 Harmony Bridge Heist, and at least $7.8 million from the 2 August 2022 Nomad Heist.

OFAC said the action was being taken ‘pursuant to Executive Order (E.O.) 13694, as amended, and follows OFAC’s May 6, 2022 designation of virtual currency mixer Blender.io (Blender).’

Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson said, ‘Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks. Treasury will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.’

OFAC added, ‘While most virtual currency activity is licit, it can be used for illicit activity, including sanctions evasion through mixers, peer-to-peer exchangers, darknet markets, and exchanges.’